Fighting Monsters And Defusing Bombs In Augmented Reality

Osuke Honda, a general partner with Menlo Park, Calif.-based venture firm DCM, says he has been traveling back and forth between Japan and the U.S. all his life. He spearheads many of DCM’s investments in Japanese companies from the firm’s office in Tokyo, and this week participated in a $12 million Series B funding for augmented-reality company Tonchidot Corp.

Tonchidot

With a couple of downloads and the camera application on a smart phone, users of Tonchidot’s software can view information on their phone screen about their physical location, drawn from geo-tagged content submitted by users. They can also battle virtual monsters or defuse virtual bombs in real-world environments. Tonchidot’s technology combines the “check-in” elements of companies like Foursquare Inc. with social games similar to those of Zynga Game Network Inc.

Honda says his favorite Tonchidot game is called Sekai Hero, in which he checks in to a location to collect points with his pink-haired monk avatar. He can also fight monsters that might be lurking in the location’s augmented reality space. “I play quite a bit,” he said. “My wife is actually fed up with me.”

In a conversation with VentureWire, Honda shed light on the burgeoning field of augmented reality, and described the fast-moving technology scene in Japan. Here’s an edited excerpt of this interview:

Q: Augmented reality has obvious potential for advertising and social networking. What can you tell us about augmented reality, and where it’s going?A: Augmented reality is a very powerful interface. The thinking is that the second wave will be all about social, and location-based. One direction we should consider is incorporating image-recognition. You’re shopping at a store, and you see that your friend bought the same shoe for a different price. For Tonchidot, we have a concept called SOLAR, social location-based augmented reality. Tonchidot is going to enhance the mobile social game.

In gaming, we see a third wave as 3-D and the intersection of the virtual and the real. Combining social location technology with this third wave becomes really powerful.

Q: You do a lot of investing in mobile technology. How is Japan different from the U.S., in terms of smartphones and consumer behavior?A: The biggest difference is that Japanese consumers have been exposed to 3G phones for the past 10 years. Ninety percent of feature phones have GPS, and have for about the last five years. Consumers have been exposed to high-performance devices and mobile social games for years. The carriers in Japan adapted their payment plans. It’s all-you-can-use Internet for a flat fee. They did this about five years ago, and it really boosted mobile usage.

Q: So, if Japanese consumers are a bit further along, what are they doing with mobile devices that we are not doing here? What can we learn by watching Japan?A: Fundamentally, there’s not a huge difference. U.S. users are on the PC. Japanese users are on mobile. But what users want does not differ that much. They want a fun experience. Japanese users are more used to location-based services, and they’re more trained to pay for content. Today, in Japan, we see more social apps. There is much more virality than in the past. In social mobile games, there are two major players, DeNA and GREE. DeNA has a market cap of about $4 billion.

Q: In the U.S., the major carriers have played a role in the evolution of phones and applications. Is it the same in Japan?A: For feature phones, the carriers have strong control of content. NTT Docomo has about 50% of the market, and they do what they want. But they have done a great job with the mobile Internet. They have led the initiative. It’s one of the reasons Japan is ahead of the pack. Now, as more people go to smartphones with open platforms, developers don’t need to be liked [by the carriers] to get exposure. Getting exposure was a huge issue in the past.

Q: So, what can the world expect, now that Japanese programmers have exposure?A: Japan does have interesting IT. Anime and games have a great history, and there is a great culture around them here that has the potential to go global. The open platforms really opened this up, and now these developers can get penetration overseas.

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